Letter to the Editor: Debt and destiny

6 mins read

Seven score and nine years ago (149 years) President Lincoln came to Gettysburg, Penn. to commemorate a cemetery for the union soldiers who had fought and died there that summer to preserve the union. He took that opportunity to put in words what he saw as the essence of the Civil War. It was, he said, a test of popular government, to see if the proposition put forth by our founding fathers could be realized. Could a free people govern themselves and meet the challenges of Civil War?

A decade earlier he had given a speech recognizing that the threat to American democracy was not to come from the tyrants and armies of Europe. He said, “That they could not by force take a drink from the Ohio river in a thousand years,” but that if failure was to be our fate it would be one self-inflicted.

For over 200 years the United State has demonstrated to the world that it can meet the challenges of tyrants both at home and abroad. It has faced down dictators, kings, and internal factions. For years we became what Lincoln envisioned we would “the hope of man on earth.”

But today I suggest that the proposition needing to be asked is can a people deep in debt be free? Can a dependent people govern themselves? What will the result of our current profligate spending be on our children’s futures?

Our current national debt stands at nearly 16 trillion dollars. We have run budget deficits of over one trillion dollars for the last four years and in the billions for the last decade. Most of this spending is on auto pilot. That it is built into the system, the big budget items are Social Security, and Medicare/Medicaid. As our society ages and the baby boom generation ages the unfunded liabilities owed are going to begin to squeeze out all other spending.

Take defense spending. Currently it is just under 700 billion dollars and dropping. If we cut out all defense spending that would not even balance our current budget. As the baby boom generation starts to retire at 10,000 members per day, Medicare/Medicaid and Social Security will begin to take up a larger and larger share of the budget. That and interest on the debt will start to squeeze out nearly everything else. And make no mistake this will have consequence for our children. We are limiting their options daily by our failure to take action and address this problem and the longer we wait the greater those consequences will be.

We already see that Europe has fundamentally abandoned any real defense force. While we certainly need to reconsider what our commitments will be around the globe. Make no mistake that the most dangerous times in history are when empires/superpowers contract. Who and what will fill the void are valid questions. Will our current course leave our nation less secure for our children? At our current rate of spending I fear going to find out sooner rather than later.

We hear much about the gap between rich and poor, rich and middle class these days. And the questions and debate are valid. But what is seldom mentioned is the divide between old and young. Those over 65 now have a greater share of the wealth than those under 35 than any time in the history of the world. In Briton, in fact, those over 50 control four-fifths of that entire nation’s wealth. Our current demographic trend shows we are just a step behind Europe in this regard.

Consider what the consequences of this might be. Currently, the unemployment rate among the young is a staggering 17 percent. This is delaying marriage and children which means that the generation asked to hold up the edifice of our current debt are going to be the least prepared to do so. The burden is likely to only get worse if our spending goes unabated.

I think Lincoln today would have reminded the nation of a biblical proverb. “The rich rule over the poor, and the borrower is slave to the lender.” Are we to make our children economic slaves? Are we to leave the next generation a world less secure? Are we to limit the opportunities of the next generation? Is this the legacy we hope to pass on? Do we believe that we will escape the laws of history? We seem to think that ignoring them may make them go away. But remember history waits for no one and the future will arrive like it or not!

Lance Harvell
Farmington

Lance Harvell is House District 89 representative for the towns of Farmington and Industry.

Print Friendly, PDF & Email

18 Comments

  1. Wait, I thought everything that politicians promised us was free. Why are we 16 trillion dollars in debt? Why don’t we just print more money? Didn’t 368,000 people just give up looking for work, that’s good right, the rate dropped too 8.1%.

  2. The big scary debt. End the Bush tax cuts. Cut defense spending. Stop listening to Republican on economic matters. They are clearly out of their element.

  3. Thanks for a great explanation of why removing the tyrant Bush from office in 2008 was so important and why it is so important to work to remove Maine’s own tyrant LePage from office at our first opportunity.

    Let us not repeat history by following the same foolish path to mindless and unfunded wars. Moreover, let’s not hand out country over to unregulated business. That has been the tryanny of our recent history!

    Look in the mirror at your own party Lance and think long and hard about it.

  4. ” That it is built into the system, the big budget items are Social Security, and Medicare/Medicaid. As our society ages and the baby boom generation ages the unfunded liabilities owed are going to begin to squeeze out all other spending. ”

    Anytime some one spouts off about SS likes this I turn off hearing anything else they have to say. SS and Medicare are NOT unfunded liabilities. They have been covered by payroll contributions since the beginning. What politicians conveniently forget when thinking about cutting these programs is how when the there were more contributors than receivers, the EXTRA money was NOT put aside in investments or even to collect interest but was STOLEN by congress. I’ve heard the argument before about how it was illegal for them to just set the money aside, but as the body of our government, who makes the laws or at least twists them to their convience they coould have done the right thing from the start?

    Congress should have resolved this decades ago but instead as usual they kick the can down the road to let someone else figure it out until we get to the point where it may be too late to save it. It ticks me off when politicians take the easy way out now and blame the programs rather than make an effort to fix them.

  5. if we don’t end all government programs now we wont be able to afford to fill a pot hole.

    ssi, end it
    medicare, end it
    post office, end it
    food stamps, end it
    section 8, end it
    USDA loans, end it
    public schools, end it
    fannie and freddy mack, end it

  6. They (SS & Medicare) have been covered by payroll contributions since the beginning. … when there were more contributors than receivers, the EXTRA money was NOT put aside …

    Forget the EXTRA part. ALL those payroll contributions go directly into the general fund. Once a year, Congress writes an IOU to Social Security for the EXTRA amount. That’s what’s in the famous lockbox – worthless paper. Except … in 2011, for the first time, SS paid out more than the contributions. There was no EXTRA. And nothing was stolen. This is the way FDR and Democrats set it up – it is, or was, a cash-cow.

    Reports indicate that, in just a few years, there will be 2 contributors for every 1 beneficiary. With 10,000 people every day climbing on Social Security, and without fundamental changes, the system will collapse under its own weight or we will be selling our children and grandchildren into indentured servitude.

    Congress should have resolved this decades ago …

    Not without an amendment to the Constitution. Of course, the Obama administration ignores that document every chance it gets, so I suppose he could resolve it by imperial decree.

  7. Hutch:

    Thanks for proving my point on the inability of anyone to take you seriously. In case you’re interested, taxes are the lowest they’ve been in years and the economy is still in the doldrums (except fot corporate profits). Most conservative responses to this I’ve seen have focused on “business confidence”. If these entreprenuers and investors are such delicate flowers that they’ve got to have absolutely risk free conditions or they’ll go scurrying off to China, maybe US economic policy shouldn’t be trying to appease them in the first place, Mr. Harvell’s uses flag waving and the national debt as cover for gutting social programs during the worst economy in living memory. It’s not just low, it’s bad economic policy (See Paul Krugman).

  8. I miss that tyrant Bush. 5.5% unemployment would sure look good right now. Over 1400 more of our service members have been killed in Afghanistan since the current administration has taken over the war they promised to end, this is more than twice as many than during the previous 7 years under the last administration. 6 trillion dollars less in debt. We can all play the blame game about which letter after the name is responsible, but the fact remains these entitlement programs are killing the country. It is not a new phenomenon, that the time would come when more would be collecting than paying in. Elected officials care more about being re elected than they do actually taking on the problems that need to be addressed. You could take all of the money from the evil corporations and the evil rich it would fund the government for about 6 mos. Serious choices need to be made with serious consequences. I don’t have the answer, but I am certain slinging mud and blaming the other persons party will not get it done.

  9. Frostproof:

    Until 2010, SS took in more payroll taxes than it paid out in benefits. It lent the surpluses to the rest of the government. Now that SS has started to pay out more than it takes in, SS can simply collect what the rest of the government owes it. This will keep it fully solvent for the next 20 plus years. The “worthless paper” SS IOU’s you speak of are US Treasury Bonds.
    The SS payroll tax only hits earnings up to a certain ceiling. (now $106,800.). The ceiling rises yearly according to a formula roughly matching inflation. In 1983, the ceiling was set so SS payroll tax would hit 90% of all wages covered by Social Security. That 90 percent figure was built into the Greenspan Commission’s fixes. The Commission assumed that, as the ceiling rose with inflation, the Social Security payroll tax would continue to hit 90 percent of total income. However, the SS payroll tax now hits only about 84 percent of total income because a larger portion of total income has gone to the top. In 1983, the richest 1 percent of Americans got 11.6 percent of total income. Today the top 1 percent takes in more than 20 percent. If we want to go back to 90 percent, the ceiling on income subject to the Social Security tax would need to be raised to $180,000. Social Security’s long-term (beyond 26 years from now) problem would be solved. There’s no reason to consider reducing Social Security benefits or raising the age of eligibility. The logical response to the increasing concentration of income at the top is simply to raise the ceiling.

  10. seamus:

    When SS redeems a bond, the money has to come from somewhere. Either (a) the funding for some government program is reduced, leading to such howls of protest from special interest groups that invertebrate politicians back down, or (b) China lends it to us, leading to more debt and increased interest, or (c) we print it, leading to inflation, or (d) hike taxes on everyone, not just the evil rich.

    The numbers have been crunched. Eliminating the SS ceiling completely will push out the date of insolvency by 6 years. Do it, or not, we’re on the fast track to where interest payments will be the largest portion of the budget. At that point, probably well before, (b) and (c) won’t be possible anymore; (d) is political suicide; that leaves (a).

    What to cut? I know. How about the military? Which language would you prefer to try to learn: Chinese or Arabic?

  11. Frostproof:

    The six years you cited is from a 2005 SS actuarial report that also said that if the wage cap is eliminated, the system’s trust fund won’t be exhausted until 2079. The system would be able to pay full benefits for 74 more years. That’s an additional 37 years beyond 2042, the year the latest Social Security Trustees Report pinpoints for trust fund exhaustion if nothing changes. This part of the report is left uncited by Paul Ryan for some reason when he talks about privatizing the program, which would have left us with a cheery result after 2008. My source was Robert Reich from last year. My guess is that we’re not going to find a middle ground here and that a combination of modest phased-in benefit cuts and modest phased-in tax increases will ultimately be the compromise that will fix Social Secuirty. As for cuts in military spending, cut away. I’m not buying the fear.

  12. The beginning of the War in Afghanistan was not followed by an increase in taxes to fund it. The beginning of Iraq II was not followed by an increase in spending to fund it.

    The Administration at the beginning of these two wars, said we were in a war against terrorism, and it would be a long war…and yet did not increase taxes to fund the effort…………

    We need to do the same things as we do in my house…increase revenue and decrease spending I have a full time job and a couple of part time jobs……we work to cut unnecsary expenses every day.

    Even going back to the tax structure before President Busch’s “temporary” tax cuts would certainly make a difference on the income front.

    Reducing defense spending over time to say five times more than our collective enemies and potential enemies list should be adequate……..

    Let’s get started! Do something!

    I am tired of take two tax cuts and see me in the morning, it just does not work.

    Whose house is it anyway?

  13. Right on Lance. Our current situation is irrelevant. It has happened and cannot be undone. Whose fault it is doesn’t matter. The only thing that matters is how we respond to it. And unfortunately, I believe we’re incapable of responding. As long as politicians are favored by not addressing issues, and the populace remains ignorant of the magnitude of the problem (as demonstrated by several here), we will fail.

    Perhaps Lance will sponsor legislation calling for an Article V Convention to force a federal balanced budget and limits on taxing authority? I believe we were only one or two states from calling such a convention back in the 80’s.

    Go for it, Lance.

  14. Bruce they are unfunded and still would be without the “theft” the current birth rates to aging alone would have done that as they have throughout western civilization and Japan.

    Just take a look at the facts.

    http://www.usdebtclock.org/

  15. You know Al, Angus King created new spending because no one saw the fiscal cliff coming by the time the budget was approved. Maine has a revenue system that is volatile, less stable, due to narrow tax brackets and a reliance on capital gains taxes. The Governor merely signs the budget into law, the legislature has the power of the purse. That is why there was such a large budget shortfall in Maine in 2001, not because the Governor acted irresponsibly.

    Angus has proven that he is fiscally conservative. You can joke all you want about fiber in breakfast cereals, but as a businessman, I know that King brought much needed investment to Maine. I wish he was Governor again!

    He is also fiscally conservative. Try to distort his record all you want, he was recently endorsed by Erskine Bowles of the Simpson-Bowles debt reduction plan that is pending in Congress. Here is what Mr. Bowles had to say about Governor King: “Angus King, as an independent, is in a unique position to bridge the partisan divide and negotiate a solution to the debt crisis. He understands that compromise is imperative to political progress and is committed to pulling politicians together, rather than apart, in the interest of America’s future.”

  16. And it would be nearly impossible to cut the defense budget by more than half because a large portion is in pensions. But it certainly can be cut. Europe, Japan and Korea would be good place to start we won those wars 60-70 years ago.

  17. If we’re a slave to the lender, who is doing the lending? (I do not think China lends what you think it lends):

    http://krugman.blogs.nytimes.com/2012/08/30/fear-of-china-syndrome/

    “So who’s actually financing the US budget deficit? The US private sector. We don’t need Chinese bond purchases, and if anything we’re the ones with the power, since we don’t need their money and they have a lot to lose. In fact, we don’t want them to buy our bonds; better to have a weaker dollar (a point that the Japanese actually get.)”

    And to not even address revenue in a budget discussion is willfully ignorant of half the problem.

Leave a Reply

Your email address will not be published.